All of the following are characteristics of leveraged buyouts EXCEPT:
A)A large amount of the purchase price is borrowed.
B)The purchased assets of the bought firm are used as collateral for the buyout.
C)LBOs have led to enormous wealth increases for the common stockholders of the acquired firm.
D)The impact of most LBOs has been an increase in the bond ratings of the acquired firm because of the decrease in perceived risk.

Question

Quizplus · Accepted Answer

Leveraged buyouts typically increase the financial risk of the acquired firm due to the high levels of debt, which often leads to a decrease in bond ratings, not an increase.

All of the Following Are Characteristics of Leveraged Buyouts EXCEPT